Our goal here at Credible is to give you the tools and confidence you need to improve your finances. Although we do promote products from our partner lenders, all opinions are our own.
If you’re wondering how to find the best mortgage lender, then you’re already on the right track. Comparing multiple lenders is one of the best things you can do as a homebuyer — and it’s especially beneficial to your pocketbook.
When looking at lenders, you want to consider their rates, fees, and the exact loan programs they offer. But you don’t have to go at it alone. In this guide, we’ll help you find the right mortgage lender for your situation.
What to look for in a mortgage lender
When it comes to finding the right mortgage lender, you also want great service, a speedy closing, and the right loan products. All this should be factored in when choosing which lender will handle your home purchase, especially if you’re a first-time homebuyer.
Here are the four factors you’ll need to keep in mind as you shop around for a mortgage:
1. Rates and fees
Each mortgage lender you apply with will give you what’s called a loan estimate — a detailed breakdown of all the fees and charges you can expect if you get a mortgage loan from them.
But when comparing lenders, it’s much easier to take a side-by-side look at their loan estimates. Pay careful attention to the mortgage rate, APR, origination and underwriting fees, and the total cash to close. These are the areas most likely to differ across different lenders.
2. Loan products
Next, you need to know the lender’s loan products. If your credit score is on the low end, you’ll probably want an FHA loan, which has looser credit requirements than other loan options. If you’re a veteran or military member, you’ll probably want a VA loan.
Make sure the lender you choose has the right loan options for your budget and needs. And if you’re not sure what exactly those loan products are, consider talking to a mortgage broker (basically a personal shopper for mortgage-seekers) or check out this resource at the Consumer Financial Protection Bureau. It breaks down the different mortgage options, as well as the four most common loans: FHA, conventional, VA, and USDA.
3. Customer service
You also want to make sure you’re getting great service from whatever lender you choose, so it’s a good idea to check out some mortgage lender reviews and ratings for each lender you consider.
JD Power also offers rankings you can check out. These are based on borrower satisfaction surveys and can help you home in on lenders that past customers have said have smooth application processes, good communication, fast loan closing, and a variety of loan products.
For the 10th consecutive year, Quicken Loans took the top spot for 2019 in JD Power’s rankings.
4. Eligibility requirements
Finally, you need to understand what each lender’s eligibility requirements are. These vary by loan product and mortgage lender, so be sure and get a breakdown of what credit score you’ll be expected to have, how much you’ll need for a down payment, and how much debt you have compared to your monthly household income.
Before you can properly compare lenders on their eligibility requirements, you’ll need to have a good idea of your financial stats. You’ll need to know your:
- Credit score: Lenders will use this number to gauge your risk and eligibility.
- Debt-to-income ratio (DTI): This is how much debt you have compared to your monthly household income. Though some might accept a higher DTI, most lenders will want to see a DTI that’s 50% or less. The lower, the better.
- Monthly income: This will impact your DTI, which is a major consideration in your eligibility for a loan.
If you need to, pull your credit report to gauge these numbers. You can get a free report once a year from AnnualCreditReport.com.
Next step: Get pre-approved!
You can use Credible to get a streamlined mortgage pre-approval in just a few minutes. Once you’re done, you’ll get a Streamlined Pre-approval Letter, detailing your loan amount and your interest rate. You can use this data to guide your home search. And the best part is that if you need to change any of the terms, you won’t have to fill out new forms; Credible lets you just change the info you need and generate a new letter quickly.
You should also include the letter with any home purchase offers you submit. This can help you stand out from other buyers and give sellers more confidence in your bid. When it comes to getting a mortgage, pre-approval is typically the most important step.